Air Methods Corporation (AIRM, Financial) is the global leader in air medical transportation. The Air Medical Services Division is the largest provider of air medical transport services in the U.S. Currently, AIRM has more than 300 bases of operations that serve 48 states. Over the years, they have fortified market presence through a variety of acquisitions.
The Tourism Division is comprised of Sundance Helicopters and Blue Hawaiian Helicopters, which provide helicopter tours and charter flights in the Las Vegas/Grand Canyon region and Hawaii. Air Methods’ fleet of owned, leased or maintained aircraft features over 450 helicopters and fixed wing aircraft.
It has built its reputation on a commitment to quality patient care and safety in aviation operations. It reported solid third quarter results and is an impressive growth stock. The company is on a growing spree and has a lot of upside to offer. AIRM will continue to deliver returns to its shareholders and I recommend this company to the investors. It may create shareholder wealth.
Strong third quarter
Same-base transports in the Air Medical Services division increased 2.4%.
The number of passengers grew 6.9% year-over-year and bottom-line results increased by 47.4% aided by lower fuel and maintenance costs. Primarily as a result of these factors, the company’s quarterly diluted EPS from continuing operations grew 27.5% year-over-year.
In the third quarter 2015, the company completed the previously announced amendment to its existing credit agreement, expanding its access to capital by $400 million of which up to $200 million can be used to repurchase shares.
The company also provided an update on preliminary October 2015 flight volume. Total community-based transports increased by 12.3% and were 5,840 during October 2015, (which were 5,199 in the prior year quarter).
Segment performance
For the third quarter, Air Medical Services revenue increased by 12.7% and was $266.8 million. Segment net income increased by 34.6% and was $85.9 million.Ă‚
Net revenue per community-based transport increased by 7.2% to $12,839 in the current-year quarter.
Tourism revenues increased by 6.7% and were $36.2 million during the quarter.
Tourism segment net income increased by 47.4% and was $4.9 million, which was $3.3 million in the prior-year quarter. Total passengers increased 6.9% to 134,157.Ă‚
(Source: company’s website)
Acquisition spree
AIRM has acquired Tri-State Care Flight. In November, Air Methods announced it entered into a definitive agreement to acquire Tri-State Care Flight and its air medical transport program.Ă‚
Tri-State Care Flight will continue to operate as a critical care transport provider servicing Arizona, New Mexico, Nevada and Colorado.
On Oct. 5, 2015, AIRM announced it had acquired San Antonio AirLIFE, owned by Baptist Health System of San Antonio/Tenet Corporation.
Strong attributes of the company:
- Solid free cash flow.
- Tourism diversification and consolidation.
- Operational efficiencies.
- Solid participation in price increases.
- Declining fuel prices.
- Increased demand.
- Strategic expansions.
On a concluding note
AIRM has remained a leading performer in this industry. With its current momentum, it is expected to grow in the near future. Growth in the demand for its services provided an impetus to this company. Declining oil prices also contributed to this growth. EPS may grow by 14% by 2016.
Disclosure: I do not hold any position in the company.
